Teddy Snyder

Tag: WCMediator.com

  • Tricks of the Settlement Trade

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    Negotiations can founder when parties (and some mediators) don’t know the tricks that remove settlement obstacles.

    Structured Settlements

    Structured settlements are ideal for funding Medicare Set-Asides. Structured settlements provide tax-free periodic payments over a specified period of time, which can be for the life of the injured worker. The structure costs less than lump-sum funding, freeing up the balance of the employer’s authorized settlement amount for the injured worker’s other needs. What’s more, unlike with lump-sum funding, lifetime payments cannot be exhausted. The injured worker receives the amount paid by the employer plus income earned from professional investment management. This trick can help bridge a negotiation gap.

    From time to time I hear that a structured settlement broker was not called in order to avoid expense. This reflects a fundamental misunderstanding of how structures work. There is no cost to consult a structured settlement broker. The structured settlement life insurance company (not any party) pays the broker a commission if a structure is placed.

    A structured settlement is not the right choice for every case.  But workers compensation professionals should always investigate this no-risk option.

    Special Needs Trusts

    Many injured workers and their families rely on Medi-Cal for their non-industrial medical needs.  However, receipt of a large sum pursuant to a Compromise & Release can disqualify the injured worker’s entire family from receipt of these benefits until funds are spent down. Placing settlement funds in a Special Needs Trust allows the injured worker to retain public benefits and still C&R the claim.

    Pooled Special Needs Trusts are similar to an attorney trust account in that the trustee pays expenses from a fund holding money for many participants. Compared to a single-beneficiary trust, pooled special needs trusts are inexpensive and quick to set up and administer.

    Professional MSA Administration

    Did you know professional MSA administration which protects the injured worker’s continued access to Medicare benefits is available for little or no cost? One of the biggest faults of the Medicare Set-Aside system is its reliance on self-administration. Administration mistakes can jeopardize the injured worker’s continued access to Medicare.

    Injured workers are more often laborers than MBA’s.  Determining which expenses are Medicare-eligible is complicated and requires constant vigilance as policies change. To retain benefits, the MSA beneficiary must submit an annual report, a burden many injured workers cannot handle. Knowing who to call to obtain free or low-cost professional administration, including reporting, can mean the difference between an open claim and a Compromise & Release.

    Reversionary Trusts

    The reversionary trust is probably the least used settlement trick.  When parties disagree about future medical needs, a reversionary trust can satisfy both sides’ interests.  A reversionary trust can pay for claim-related medical expenses over a specified time.  If the money is not needed, at the conclusion of the trust the money reverts to the payer.

    Some adjusters object that there is no way to account for refunded amounts without leaving the claim open. Applicants may balk at the lack of unfettered access to trust funds. I had one case where the prospect of a reversionary trust caused the claimant to reduce the demand on condition the money was paid in cash now; the case promptly settled.

    With the right parties, a reversionary trust is a solution which allows everyone to be right. Or just raising the possibility can get parties to settle.

    There Are Many More Tricks

    Every workers compensation professional in the process from Notice of Injury to Compromise & Release has a distinct role. If you are considering closing the claim, it’s time to bring in the person whose focus is settlement, a knowledgeable mediator.

  • How Did You Get To That Number?

    Case evaluation is part art and a lot of math. We’re not talking calculus; we’re talking arithmetic.

    A surprisingly large number of lawyers tell me they’re bad at math. They’re not alone. CNN anchor Chris Cuomo recently got his math corrected by his co-anchor Michaela Pereira while discussing Powerball lottery numbers.
     

    You can’t come up with a realistic evaluation of a Workers Compensation claim if you can’t quantify the component parts: Permanent Disability, Life Pension, and Medicare-eligible and non-Medicare-eligible Future Medical.

    In mediation caucus, when parties give me their offer or demand I often ask, “How did you come up with that number?” I want their best argument that will convince the other side. The first answer I get is often vague, like “We thought it would settle the case.” Workers compensation professionals often neglect running the numbers. Getting parties to see the same numbers moves them to settlement.

    I recently got a call about an offer in a personal injury case. I questioned the plaintiff’s attorney about what he thought this number represented. It didn’t sound right to me. “Did you ask them how they came up with that number?” No, he hadn’t. I suggested the attorney ask opposing counsel that question to allow movement forward toward settlement.

    Random demands and offers are unlikely to settle a claim. Before you assume the other side is being unreasonable or you respond, ask: How Did You Get To That Number?

  • Teaching Risk Management to an Eight-Year-Old

     

    “Grandma, why did you move my chopsticks?”

    My extended family was dining on Cashew Chicken, Mongolian Beef, and fried wantons. Without missing a beat I answered, “Well, Ashley, I’m all about risk management. I noticed your chopsticks were sticking out over your lap, and there was a risk you or I might knock them to the floor [notice the diplomacy there], so I initiated a safety program. I rotated the chopsticks on your plate to stick out over the table instead of the floor.”

    Dead silence.

  • Get “In Pro Per” Claims Off The Books

    You know the claims I’m talking about: the really old claims where the Injured Worker is representing himself/herself. Let’s call them “in pro per”s.  Active in pro pers file one court paper after another, causing the insurer or self-insured employer to fund what seems like a never-ending stream of money to send a representative to the Board. The in pro per’s papers may not state a recognizable claim. Pressed for time, the Information and Assistance officer may give the in pro per short shrift.  Defense attorneys with varying degrees of patience usually do, too.

    But what if what the parties really need is a sort of an interpreter, a mediator.

    Mediating an in pro per’s claim demonstrates respect for the in pro per.  The feeling of lack of respect and inability to get heard is often what drives the in pro per to keep summoning the employer to court.

    “Why would I waste time and money on a worthless claim?” you may ask. Because you’re spending time and money now, and mediation is a way to end that endless cycle.

    Sometimes the in pro per has a bona fide complaint, but without professional assistance has not been able to communicate it. The neutral mediator is often able to re-state the concern in a way the parties can address and put past them. The mediator can help each party see the other side’s point of view.

  • Do You Speak MSA?

    “MSA” stands for Medicare Set-Aside.  Settling a Workers Compensation claim often calls for consideration of Medicare’s interests.  MSA-speak has its own language.  The problem is that the term “MSA” is used to mean different things.  Understanding the 4 different items which may be referred to as “MSA” is critical to success in this area:

    MSA Report

    MSA Allocation

    MSA Approval

    MSA Account

    The MSA Report is prepared by an MSA allocation company.  It is an analysis of medical reports and paid medical benefits resulting in a recommendation for an MSA allocation.  The report typically provides both lump sum and annuitized funding options.   The report is not “the MSA”.  Multiple versions of a report may be prepared during evaluation and negotiation.  Nothing has been “set aside” just because there is a report.

    The MSA Allocation must be in good faith.  The parties can agree on an allocation without a report, though this is usually limited to cases brought by Medicare beneficiaries which settle for less than $25,000 and denied cases where the settlement is unrelated to medical expenses.  An allocation in a settlement document can be as simple as “The parties have taken Medicare’s interests into account and set aside $800 for future Medicare-eligible claim-related expenses.”

    Parties can choose to seek from the Centers for Medicare and Medicaid Services (“CMS”) Approval of an MSA allocation.  Seeking approval is optional.  Only the two classes of cases which meet CMS “review thresholds” can be submitted.   Class One includes all cases brought by Medicare beneficiaries settling for at least $25,000.  Class Two includes cases where the settlement is at least $250,000 and the worker is likely to be eligible for Medicare within 30 months.  If CMS approves the allocation, it cannot seek more than the approved amount later.

    Upon conclusion of the settlement, the worker will open an MSA Account.  This must be a separate account solely for MSA funds.   It is supposed to be interest bearing, though it may be difficult to find an institution that would pay interest on smaller accounts.  If any of these concepts can be called simply “the MSA”, it is the account.  Money has in fact been set aside, separate from the rest of the settlement and separate from the worker’s other assets.  Note that the correct term is “account”, not trust.  MSA Accounts can be custodial or non-custodial.

    “Do we need an MSA?” may be appropriate in referring to the entire process.  And there are plenty of times you want to use a verbal shortcut.  But vague references as to whether the subject is a report, allocation, approval or account can sometimes lead to misunderstandings.

  • Understanding Public Income and Medical Benefits after the Affordable Care Act

    acaThere’s a lot more to the Affordable Care Act than buying private health insurance through an exchange marketplace like www.CoveredCA.com.

    Four kinds of public benefits can help people get the medical care they need:

    1. Subsidized premiums and co-pays for private health insurance purchased through an exchange.  Commercial insurers issue these policies, not the government.
    2. Medicare, for people who have contributed the necessary number of quarters during their years of employment. Medicare Set-Asides are required when a Medicare beneficiary settles a claim for future medical care.
    3. Expanded Medi-Cal for people with low income; there is no asset limit, no requirement for a set-aside
    4. Traditional Medi-Cal for the indigent; there are income and asset limits, no requirement for a set-aside

    These types of benefits are frequently confused, especially because the names are so similar.  For optimal settlement of a Workers Compensation case, you need to know the injured worker’s eligibility for these plans.

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  • The Elephant in the Room

    Sometimes the issues the lawyers and adjusters are discussing are not what is most important to the Applicant.

    Recently, in a pretty small case, the professionals told me the disagreements were about what had been paid and what was still due. The injured worker told me his biggest concern was that, although he had returned to modified duty, the employer had told him there was no more work for someone with his disability. The injured worker was terrified that he would be out of a job with no ability to get another one, but that is not what the lawyers were discussing.

    Many times, the injured worker’s biggest issue is not one that is dispositive of any issue in the case, but, in fact, is the driver for the injured worker’s decisions– the proverbial elephant in the room the negotiators are trying to ignore.

    Because these are often personal matters, the injured worker may not share these concerns with the employer’s side– or even the injured worker’s own lawyer.

    • The woman with a sick teen-aged son who desperately wanted to control her own industrial medical care, but was afraid that if she C&R’d her case, the lump sum payment would result in the family’s loss of Medi-Cal which provided care for the son.
    • The man  suffering from non-industrial cancer whose biggest concern was leaving an estate to support his wife.
    • The injured worker who wanted to return to his home country, but feared that expressing that desire would diminish the value of the claim.
    These issues can often be discovered and resolved through mediation. Parties can express their concerns to the mediator confidentially. Once the mediator knows the real issue,  the mediator can often re-frame the issues to allow the parties to reach resolution– all without breaching confidentiality.
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